Apr
30
Charge Heavily For What You Know
April 30, 2008 | Comments Off
Charge Heavily For What You Know
…but give away what you do not know.
Often I am in a situation where I am called to provide advice and a satisfactory outcome to a situation where the Client doesn’t have the time or expertise to complete a task. I happily do the work: in my opinion faster and better than the employees of my Clients, or even other Consultants that my Clients may decide to hire. In some situations I know I am venturing in areas where I do not have too much expertise, but I can still learn how to accomplish the task during the performance of Services. In those times, I am very sincere with the Client: I state what I do not know, I offer to work with them to learn how to do it and I only charge for the actual accomplishment of the task, not for the time spent learning how to perform it.
This certainly allows for fixed price engagements (my favorites) to become opportunities for extended self-education – without having to drive to your local University for it. I also allows for you to take projects larger than the ones you would have taken: since you can still act professionally and charge only for what you know and do.
On Time and Materials Projects (Hourly/Daily rate) this causes an interesting situation: It reduces the billable hours. How do we compensate for that? Higher rates.
Higher rates are what a Consultant should try to accomplish. Maintaining higher rates shows that you are highly valued resource within your field; not to mention the potential gain. As the value of your services increases, your rates should increase as well. But you can’t increase rates unless you show value: and someone learning during the course of their services puts that person closer to the “Temporary or Hourly Worker” title than the “Consultant” title. A Consultant is, after all, someone with deep knowledge and expertise in one area – not someone who wants to learn how to perform in that area.
Let me illustrate what I mean:
- An 80 hour gig at $100/hr grosses you $8,000.
- An 80 hour gig where you spend 20 hours learning (free) and 60 performing or advising at a rate of $130/hr gives you $7,800. But from that moment onward, the performance of the services you just learned how to perform a task worth $130/hr, while your current client is not a penny poorer.
You see. I do not like hourly rates. But if you must use them (some companies insist), then you should avoid falling into the “Temporary or Hourly Worker”. This is just one way of doing so.
Charge Heavily for What You Know and give away the hours you spend learning to perform a task. It is a great differentiator.
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